02041cam a22002657 4500001000700000003000500007005001700012008004100029100002400070245009800094260006600192490004200258500001600300520080000316530006101116538007201177538003601249690007601285690009501361690012501456710004201581830007701623856003801700856003701738w14933NBER20171213215635.0171213s2009 mau||||fs|||| 000 0 eng d1 aRotemberg, Julio J.10aAltruistic Dynamic Pricing with Customer Regreth[electronic resource] /cJulio J. Rotemberg. aCambridge, Mass.bNational Bureau of Economic Researchc2009.1 aNBER working paper seriesvno. w14933 aApril 2009.3 aA model is considered where firms internalize the regret costs that consumers experience when they see an unexpected price change. Regret costs are assumed to be increasing in the size of price changes and this can explain why the size of price increases is less sensitive to inflation than in models with fixed costs of changing prices. The latter predict unrealistically large responses of price changes to inflation for firms that do not frequently reduce their prices. Adjustment costs that depend on the size of price changes also raise the variability on the size of price increases. Lastly, it is argued that the common practice of announcing price increases in advance is much easier to rationalize with regret concerns by consumers than with more standard approaches to price rigidity. aHardcopy version available to institutional subscribers. aSystem requirements: Adobe [Acrobat] Reader required for PDF files. aMode of access: World Wide Web. 7aD11 - Consumer Economics: Theory2Journal of Economic Literature class. 7aE31 - Price Level • Inflation • Deflation2Journal of Economic Literature class. 7aL11 - Production, Pricing, and Market Structure • Size Distribution of Firms2Journal of Economic Literature class.2 aNational Bureau of Economic Research. 0aWorking Paper Series (National Bureau of Economic Research)vno. w14933.4 uhttp://www.nber.org/papers/w1493341uhttp://dx.doi.org/10.3386/w14933